Institutional racism (or structural racism or systemic racism) is a form of racism that occurs in institutions such as public bodies and corporations, including universities. The term was coined by black activist Stokely Carmichael. In the late 1960s he defined the term as "the collective failure of an organisation to provide an appropriate and professional service to people because of their colour, culture or ethnic origin".[1] In the UK, the inquiry following the murder of Stephen Lawrence accused the police force of being institutionally racist.

Institutional racism is distinguished from the bigotry or racial bias of individuals by the existence of systematic yet covert policies and practices that have the effect of disadvantaging certain racial or ethnic groups. Race-based discrimination in housing (see restrictive covenants) and bank lending (see redlining), for example, are forms of institutional racism.

The term "institutional racism" has also been applied to policies, systems, and processes which are not necessarily caused by intentional racism but which have the effect of disadvantaging certain racial groups.

For example, an institution which states that women have to wear skirts is institutionally discriminating against religions where women are expected to hide the shape of their legs. An institution which expects everyone to wear the same hat is institutionally discriminating against Sikh men, who are expected to wear turbans, and Muslim women who wear the hijab or a veil. Institutions don't necessarily adopt such rules with the intention of discriminating, and often, once the discrimination has been pointed out, institutions revise their policies. For example, Sikh police officers may now wear turbans instead of helmets.

The use of standardized testing is often termed "institutional racism," as this kind of assessment is often significantly influenced by cultural and social background, with the supposed result that in much of the Western world racial minorities tend to score lower. This promotes both societal and cultural segregation based only on educational background, and not specifically the individual's race or ethnicity. However, it is generally those individuals who are both born and educated in foreign countries that are most likely to encounter this phenomenon.